Florida’s Orange Supply Woes Continue in 2023, Pushing Orange Juice Prices up to Record Levels

The state of Florida's orange production continues to worsen. Pest and disease infestations and adverse weather conditions have resulted in crop failures leaving a black spot in the Sunshine State. Citrus greening entered the country in 2005 and has now affected eight US territories and states, including Florida, the leading citrus-growing state in the US. The Floridian orange crop also suffered due to a wave of devastating storms that swept through the tropical coast in the USA in mid-2022. According to the University of Florida, Hurricane Ian resulted in citrus farmers incurring losses worth USD 250 billion, causing supply to be tight and prices to skyrocket as reported by Tridge here.

Consequently, the 2022/23 orange crop is set to drop to record low levels. The Valencia orange variety is set to plunge to 10 million boxes from 22.8 million boxes in 2021/22, while the Navel crop is forecast down by 66.6% YoY to 6.1 million boxes. According to the USDA March Florida Orange Forecast, the state's orange crop is expected to fall to 16.1 million boxes, 61% lower than last season's crop and the smallest crop in over 80 years. This overall citrus crop is set to be the lowest since WWII, with acreage in the state dropping to about half of what it was 20 years ago.

Orange juice supply in the US is expected to remain tight this year, resulting in orange juice (OJ) futures rising significantly over the past two months. According to the Intercontinental Exchange (ICE), May 23 contracts traded at USD 2.79/lb on the 28th of February compared to USD 2.06/lb on the 27th of January, a 35.4% increase. This price was also up 91.1% compared to the previous year and the highest on record. Despite a slight decrease to USD 2.41/lb on the 22nd of March, prices remain elevated, trading above USD 2.00/lb since the beginning of the year.

Source: Tridge, ICE

Florida's OJ production woes have opened up an opportunity for Brazil, the leading global exporter of orange juice. As a result, Brazil exports of OJ to the US are up to 240K tons this season, a staggering 82% increase compared to the previous season. Brazil's export revenue to the US has seen a larger increase owing to high export prices, rising by 110% to USD 478.7 million. Besides Brazil, the US will also be looking to Mexico to fill the supply gap. However, Mexico is also facing production setbacks this season due to a prolonged drought in the North-Eastern part of the country. As a result, according to the USDA, Mexico is forecast to produce 176K mt of OJ, down from 215K mt the previous year.

The US is actively seeking ways to alleviate the damage to their orange crop. In February, a bill was introduced, giving USDA grants to farmers, helping them recover from the crop damage. Florida has also invested USD 29 million for protection and research in the citrus industry. Different solutions to citrus greening are also being explored, such as experimentation with nutritional supplements to strengthen the trees and trunk injections to help the trees fight the disease's bacteria. Researchers across the state are also developing modified citrus trees resistant to citrus greening.

Tridge expects OJ prices to remain in the upper range for the coming month due to the supply crunch. Despite the various strategies employed to rejuvenate fresh orange and orange juice production, it could take at least two full seasons for orange groves to recover to pre-hurricane production levels.

For related stories, please refer to the links below.

1. Rising US Demand Continues to Impact Brazilian Orange Supply, Lifting Prices by 14%

2. Citrus Greening Spreads Through Brazil’s Citrus Belt, Threatening Global Orange Supplies

3. FCOJ Futures Rise To Record Levels As Hurricane Ian Worsens Florida’s Citrus Supply